Shelter Mut. Ins. Co. v. Rimkus Consulting Grp., Inc. of La.
| Decision Date | 01 July 2014 |
| Docket Number | No. 2013–CC–1977.,2013–CC–1977. |
| Citation | 148 So.3d 871 |
| Court | Louisiana Supreme Court |
| Parties | SHELTER MUTUAL INSURANCE COMPANY v. RIMKUS CONSULTING GROUP, INC. OF LOUISIANA, et al. |
We granted this writ application to resolve a split in the circuit courts of appeal regarding whether forum selection clauses are per se violative of public policy in Louisiana. Answering that question in the negative, we reverse the rulings of the lower courts.
Shelter Mutual Property Insurance Company (“Shelter”) retained Rimkus Consulting Group, Inc. (“Rimkus”) to provide an engineering evaluation and expert witness services in connection with its defense of litigation resulting from a claim for hurricane damages brought by a corporation insured by Shelter. Rimkus sent Shelter a letter confirming the engagement and indicating Rimkus' services were subject to its “Terms and Conditions” attached to the letter. The “Terms and Conditions” included a forum selection clause which required venue for any suits arising out of the contract to be in Harris County, Texas.
When a dispute arose, Shelter filed suit against Rimkus in the 15th Judicial District Court for the Parish of Lafayette. Shelter essentially asserted Rimkus issued an erroneous opinion relative to the cause of the property damage and failed to properly estimate the underlying repair costs, causing Shelter to incur liability for bad faith damages and additional costs relative to further litigation.1 Rimkus filed an exception of improper venue, arguing the forum selection clause included in its “Terms and Conditions” required suit to be brought in Texas. Shelter opposed the exception, arguing it never agreed to the unilateral “Terms and Conditions” and thus they were not part of the agreement between the parties. Further, Shelter asserted even if the “Terms and Conditions” formed part of the agreement, the forum selection clause should not be enforced because enforcement would be unreasonable, unjust, and contravene a strong public policy of Louisiana.
The trial court found the parties had tacitly agreed to be bound by the “Terms and Conditions.” Recognizing a split in the circuit courts of appeal regarding whether forum selection clauses violate the public policy of this state, and being bound by the Third Circuit, the trial court overruled Rimkus' exception of improper venue citing Thompson Tree & Spraying Serv., Inc. v. White–Spunner Const., Inc2 which held forum selection clauses are against the public policy of Louisiana. Rimkus applied for supervisory writs and the court of appeal denied the writ, finding no error in the trial court's ruling.3 Rimkus filed the instant writ application in this court, which we granted.4
While we granted this writ application solely to resolve the split in the circuits regarding whether forum selection clauses violate public policy in Louisiana, as a preliminary matter we first briefly address Shelter's assertion that the “Terms and Conditions” containing the forum selection clause were not negotiated terms between the parties and therefore not part of its agreement with Rimkus.
Contrary to Shelter's contentions, we find the trial court clearly ruled the “Terms and Conditions” applied to the parties. Although the trial judge denied the exception of venue based on Thompson Tree , a reading of the transcript demonstrates that he also determined the “Terms and Conditions” applied. Specific to the parties' arguments relative to whether the “Terms and Conditions” were applicable, the trial judge stated “[w]ell, frankly, I'm prepared to make some decisions relative to the merits of that argument so that when it goes forward, a Court of Appeal or the Supreme Court has an opportunity to look at it.” The court went on to rule:
After reviewing the record, we agree with the trial court's ruling and hold the course of conduct between the parties supports a finding that the parties tacitly agreed the “Terms and Conditions” would be applicable to Shelter's engagement of Rimkus. The “Terms and Conditions” were sent to Shelter as part of Rimkus' confirmation letter accepting the job assignment and agreeing to provide services to Shelter. Shelter had previously retained Rimkus for consulting services numerous times and the same “Terms and Conditions” were routinely provided as part of its job acceptance.5 Further, on three prior occasions, the same counsel for Shelter expressly accepted these “Terms and Conditions.” There is nothing in the record to indicate Shelter disputed or objected to the “Terms and Conditions” prior to opposing the exception of venue. And, as noted by the trial court, the parties acted in accordance with the “Terms and Conditions” relative to billing and payments during the job assignment. Notably, the “Terms and Conditions” is the only agreement or contract in the record which sets forth particular provisions and obligations of the parties relative to this job assignment. Finding the “Terms and Conditions” applicable, we now examine jurisprudence relative to the enforceability of forum selection clauses in Louisiana.
“A forum selection clause is a provision in a contract that mandates a particular state, county, parish, or court as the proper venue in which the parties to an action must litigate any future disputes regarding their contractual relationship.”6
Historically, many American courts had found such clauses to be invalid as against public policy. However, that began to change in 1972 with the United States Supreme Court's decision in Bremen v. Zapata Off–Shore Co.7 In Bremen, the Court noted that forum selection clauses had not been historically favored by American courts and that “many courts, federal and state, have declined to enforce such clauses on the ground that they were ‘contrary to public policy,’ or that their effect was to ‘oust the jurisdiction’ of the court.”8 The Bremen Court rejected that viewpoint. The Court described the traditional view that forum selection clauses impermissibly oust courts of jurisdiction as a “vestigial legal fiction.”9 The Court concluded that such clauses should be deemed presumptively valid and ordinarily enforceable, unless enforcement would be unreasonable, or the consent of the party challenging the clause was obtained through fraud or undue influence, or the chosen forum is unreasonable and seriously inconvenient.10
Bremen arose under the federal court's admiralty jurisdiction and thus does not mandate that state courts enforce forum selection provisions outside of an admiralty context. However, the Supreme Court's analysis in Bremen influenced the enforceability of forum selection clauses in subsequent state court litigation, including Louisiana. Prior to the Third Circuit's decision in Thompson Tree , our appellate courts had repeatedly held that forum selection clause are generally legal and binding in Louisiana, and anyone seeking to set one aside bears a heavy burden of proof.11 These decisions followed the Supreme Court's reasoning in Bremen, and generally held forum selection clauses should be enforced, unless the resisting party proves that enforcement would be unreasonable and unjust, or that enforcement would contravene a strong public policy for the forum where the suit is brought. The Louisiana Third Circuit Court of Appeal in Thompson Tree reversed course on this standard enforcement of forum selection clauses and held that such clauses are unenforceable because they violate the Louisiana Code of Civil Procedure and the strong public policy of Louisiana.12
In considering the enforcement of forum selection clauses, the court in Thompson Tree pointed out that under a civil law system, legislation is the authoritative source of law, noting that “[t]here are two sources of law in Louisiana: legislation and custom, with legislation superceding custom in every instance.”13 The court specifically declined to accept the holdings from the other circuits making forum selection clauses enforceable in Louisiana, reasoning that none of those cases examined the primary source of law in Louisiana and instead relied on the United States Supreme Court's pronouncements.14
The court derived a general policy statement against forum selection clauses from La. C.C.P. art. 44(A), which provides that “an objection to the venue may not be waived prior to the institution of the action.” The court further relied on La. R.S. 51:1407, which provides, in pertinent part:
It being against the public policy of the state of Louisiana to allow a contractual selection of venue or jurisdiction contrary to the provisions of the Louisiana Code of Civil Procedure, no provision of any contract which purports to waive these provisions of venue, or to waive or select venue or jurisdiction in advance of the filing of any civil action, may be...
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